Trade Between Euro Zone and Arab Countries: a Panel Study

Nasri Harb ()

MPRA Paper from University Library of Munich, Germany

Abstract: We construct an aggregate data panel to estimate price and income elasticities of the Arab countries imports from and exports to euro zone. We study the non-stationarity of our series and verify the cointegration hypothesis among the variables using Pedroni's heterogeneous panel cointegration tests (2004). The panel data circumvent the problem of short span sample and increase the power of the non stationarity tests. Then, we estimate the idiosyncratic and panel cointegrating vectors using DOLS (Kao and Chiang, 2000), FMOLS (Phillips and Hansen, 1990) and group-mean DOLS and FMOLS developed by Pedroni (2000, 2001). Our variables are shown to be cointegrated. Arab imports from Euro zone countries are income inelastic, but price elastic. Results of export function are not conclusive and depend on the used estimator.

Keywords: Imports; Exports; Time series; Panel Cointegration; DOLS; FMOLS (search for similar items in EconPapers)
JEL-codes: F40 F30 F11 C23 C22 (search for similar items in EconPapers)
Date: 2006-03
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Published in Applied Economics 16.39(2007): pp. 2099-2107

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Journal Article: Trade between Euro zone and Arab countries: a panel study (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:pra:mprapa:13675

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